U.S. Government Seeks Prison for FATCA Investment Fraud

U.S. Government Seeks Prison for FATCA Criminal Investment Fraud

U.S. Government Seeks Prison for FATCA Investment Fraud: The U.S. Government Seeks Prison for FATCA Investment Fraud (aka Offshore Tax Evasion and Money Laundering) in a landmark FATCA criminal case. As we have reiterated for many years on our website, the U.S. Government takes an aggressive approach on matters involving foreign accounts compliance and unreported foreign income. When offshore tax fraud is involved, the stakes are even higher. This has culminated in a criminal conviction for the U.S. on a FATCA case — which generally results in a civil (not criminal) violation.

Last year, the U.S. government investigated several individuals for fraud involving FATCA Crime(Foreign Account Tax Compliance Act). The fraud spanned multiple countries, and at the end of the day Panayiotis Kyriacou (defendant) was indicted.

Defendant pled guilty, and still the U.S. Government is taking no mercy. Defendant’s co-conspirators were sentenced to time-served.

U.S. Government Seeks Prison for FATCA Investment Fraud Defendant

The government wants Defendant to at least serve “some-time” and submitted a very detailed and lengthy letter in support of the Government’s position on sentencing.

As provided in the U.S. letter to the judge re: sentencing (which is very lengthy):

“Because the defendant is in Criminal History Category I, his advisory Guidelines range is 37-46 months’ imprisonment.”

Excepts from the Sentencing Guidelines Letter

Here are excerpts from the Government’s Letter (subheadings are used for description purposes only)

“The government respectfully submits that the following factors are particularly significant in determining the appropriate sentence in this case.”

The Scheme was Sophisticated

“First, because sophisticated fraud schemes, like the instant scheme with multiple international actors, are difficult to detect and prosecute, there is greater need for general deterrence. See, e.g., Harmelin v. Michigan, 501 U.S. 957, 988 (1991) (noting that “since deterrent effect depends not only upon the amount of the penalty but upon its certainty, crimes that are less grave but significantly more difficult to detect may warrant substantially higher penalties”).

Because “economic and fraud-based crimes are more rational, cool and calculated than sudden crimes of passion or opportunity, these crimes are prime candidates for general deterrence.” See, e.g., United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006) (quoting Stephanos Bibas, White–Collar Plea Bargaining and Sentencing After Booker, 47 Wm. & Mary L. Rev. 721, 724 (2005)) (internal quotation marks omitted)); United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994) (“Considerations of (general) deterrence argue for punishing more heavily those offenses that either are lucrative or are difficult to detect and punish, since both attributes go to increase the expected benefits of a crime and hence the punishment required to deter it.”); Drago Francesco, Roberto Galbiati & Pietro Vertova, The Deterrent Effects of Prison: Evidence From a Natural Experiment, 117 J. of Political Econ. 257, 278 (2009) (“Our findings provide credible evidence that a one-month increase in expected punishment lowers the probability of committing a crime. This corroborates the theory of general deterrence.”).

Here, the defendant participated in multiple international fraud schemes that are inherently difficult to detect and that, in part, rely upon brokers, offshores management companies and bankers to succeed. In addition, as the Guidelines state, “[b]ecause of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines.” U.S.S.G. Ch. 2, Pt. T, Intro. Comment.”

Money-Laundering was Involved

“Second, the defendant agreed to launder (and in fact did launder) what was represented to be fraud proceeds, and then sought to involve the Undercover Agent in additional laundering outside of Beaufort. To be sure, the defendant did not plead guilty to the money laundering conspiracies charged in Counts Two and Three.

But it is clear that the defendant conspired to launder money in multiple ways and the government respectfully submits that this is an important consideration under 18 U.S.C. § 3553(a).”

Proportionality to Other Defendants who were Sentenced

“Third, the government agrees that proportionality between defendants in this case should be considered. The Court has sentenced two defendants in this case. Adrian Baron, the former Chief Business Officer of Loyal Bank, was sentenced to time served, effectively eleven months in prison, for conspiring to defraud the United States by failing to comply with FATCA.

The Court determined Baron’s advisory Guidelines range to be 18 to 24 months’ imprisonment. Arvinsingh Canaye, the former General Manager of Beaufort Management, was also sentenced to time served, or effectively thirteen months in prison, for conspiring to commit money laundering, in violation of 18 U.S.C. § 1956(h).”

The Court determined Canaye’s advisory Guidelines range to be 57 to 71 months’ imprisonment (which was stipulated to by the parties). The government submits that two factors are particularly relevant in determining a proportionate sentence.

A Longer Period of Criminal Activity than Co-Defendants

“First, as compared to his co-defendants, the defendant engaged in criminal conduct for the longest period of time; took the most steps in furtherance of the schemes; and introduced the Undercover Agent to a separate multi-million dollar money laundering scheme.”

Defendant Held a more Junior Position than his Co-Defendants

“Second, the defendant’s role at Beaufort was substantially junior to that of Baron, who was the Chief Business Officer and former Chief Executive Office of a bank. Finally, the Court should consider that the defendant voluntarily traveled to the United States to plead guilty. This spared the government from seeking extradition and reflects the defendant’s acceptance of responsibility.”

Golding & Golding: About Our International Tax Law Firm

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

*Please beware of copycat tax and law firms misleadingthe public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

We represented a client in an 8-figure disclosure that spanned 7 countries.

We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.

We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.

We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.

We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel

Generally, experienced attorneys in this field will have the following credentials/experience:

20-years experience as a practicing attorney

Extensive litigation, high-stakes audit and trial experience

Board Certified Tax Law Specialist credential

Master’s of Tax Law (LL.M.)

Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

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